SHRI VINAY DASHRATH GUPTA,MUMBAI vs. INCOME TAX OFFICER 20(3)(4), MUMBAI

In ground no.1, the assessee has challenged the validity of re– opening of assessment under section 147 of the Income–tax Act, 1961 (for short "the Act"). However, at the time of hearing, the learned Authorised Representative submitted that on instructions of the assessee he does not want to press this ground. Accordingly, ground no.1 is dismissed as not pressed.

In ground no.2, the assessee has challenged the addition of ` 10,16,300 under section 68 of the Act.

Brief facts are, the assessee is an individual. As observed by the Assessing Officer, assessee did not file its return of income. Subsequently, on the basis of information received indicating that the assessee had deposited cash of more than ` 10 lakh in his bank account, the Assessing Officer re–opened the assessment under section 147 of the Act. In response to the notice issued under section 148 of the Act, the assessee filed his return of income. During the assessment proceedings, the Assessing Officer called upon the assessee to explain the source of cash deposits in the bank account. In response, it was submitted by the assessee that he has undertaken a contract work which required cash payment to be made to daily labourers. Since, the assessee was having a current account, he opened a savings bank account to facilitate withdrawal of cash through

Though, the assessee challenged the addition before the first appellate authority, however, learned Commissioner (Appeals) sustained the addition made by the Assessing Officer.

The learned Authorised Representative reiterating the submissions made before the Departmental Authorities contended, to meet the requirement of daily cash payment to be made to the labourers and purchase of raw materials, the assessee used to withdraw money from the current account and deposit in the savings bank account. Thus, he submitted, the cash deposits made in the savings bank account are out of cash withdrawals made from the current account. In this context, he relied upon the copy of bank book and cash flow statement submitted in the paper book.

The learned Departmental Representative relying upon the observations of the learned Commissioner (Appeals) submitted that the assessee has failed to properly explain the source of cash deposits in the bank account. Thus, he submitted, the addition made is justified.

I have considered rival submissions and perused material on record. Undisputedly, in the relevant previous year the assessee has made cash deposits into his savings bank account. While explaining the source of such cash deposits, the assessee had submitted that such deposits were made out of cash withdrawals from the current account. Though, no substantive evidence has been submitted by the assessee to conclusively co–relate withdrawals with the deposits, however it is observed, the fact that the assessee has made sufficient cash withdrawals from the current account has not been disputed by the Assessing Officer and learned Commissioner (Appeals). This fact is very much evident from the observations of the learned Commissioner (Appeals) in Para–5.3 of his order. Therefore, the availability of sufficient cash at the hands of the assessee to make the deposits in the saving bank account cannot be doubted. More so, when the Departmental Authorities have not been able to identify the utilization of cash withdrawals from the current account in any other assets/ mode or manner. That being the case, the explanation of the assessee

In ground no.3, the assessee has challenged disallowance of ` 1,77,218, out of the expenditure claimed.

Brief facts are, in the course of assessment proceedings, the Assessing Officer noticed that as against the net receipt of ` 19,24,352, the assessee has debited expenditure to the tune of ` 17,72,186. As alleged by the Assessing Officer, when he called upon the assessee to furnish supporting evidence to justify the expenditure claimed the assessee expressed his inability to produce any evidence. Therefore, the Assessing Officer disallowed 10% out of the total expenditure claimed which worked out to ` 1,77,218.

Though, the assessee challenged the aforesaid disallowance before the learned Commissioner (Appeals), however, the addition was sustained.

I have considered rival submissions and perused material on record. Undisputedly, before the Assessing Officer, the assessee has failed to fully justify the claim of expenditure with supporting evidence. The aforesaid factual position remains unaltered even before me. That being the case, disallowance of 10% out of the expenditure claimed deserves to be sustained. This ground is dismissed.

In the result, appeal is partly allowed. Order pronounced in the open Court on 05.04.2019